The price of oil rose to $78 today – $1 up on yesterday – on fears Hurricane Ida could seriously affect production at US rigs and refineries at the Gulf of Mexico.
Analysts are doubtful of oil’s legs, however.
Speaking with Reuters, JP Morgan energy analyst Lawrence Eagles said even if capacity is shut in, it is unlikely to stay at this price given the amount of spare refining capacity and crude in land and offshore storage.
Saudi Arabia has also said it will be keeping an eye on oil supplies, maintaining a steady flow next month to try curb supplies of crude.
Producers were shutting down operations today as the hurricane approached, creating fears that the US’s top oil and gas region could be devastated by the hurricane on route to major operations there.
London Brent crude rose 94¢ to $76.81 and US crude for December delivery rose 96¢ to $78.39 a barrel by 5.59am GMT after earlier surging to $78.45.
Oil has gained around 70% so far this year but is still about 47% below the record high of above $147, hit in July last year.
Saudi Arabia’s King Abdullah said he thought $75 was a fair price for consumers and producers, and that the nation could increase its pumping by about 50%, or four million barrels a day, enough for all of Brazil if need be, according to Bloomberg.